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Dow Jones Falls, Nasdaq Leads Downside As Janet Yellen Warns Of Rising Interest Rates

The Dow Jones Industrial Average sold off in today’s market. The major indexes traded near intraday lows after Treasury Secretary Janet Yellen mentioned interest rates may have to rise to ensure the economy doesn’t overheat. The Nasdaq led on the downside as technology stocks extended Monday’s declines.




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Stock Market Today

At around 12 p.m. ET, the Nasdaq composite fell roughly 2.5%, leading on the downside. The S&P 500 traded around 1.2% lower, while the Dow Jones posted a loss of 0.5%. The small-cap Russell 2000 index held a loss of 2%. Volume was running higher on the NYSE and the Nasdaq vs. the same time on Monday.

Stocks opened lower on Tuesday and continued to slide in morning trading. Comments from Treasury Secretary Janet Yellen also hindered the major indexes. “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” she said during an economic seminar.

Inflation concerns have arisen due to the recent heavy stimulus spending and rapid economic growth. Investors may want to keep an eye on possible inflation signals, including those seen in oil prices, copper prices and bond yields. West Texas intermediate oil rose nearly 2%, to $65.70 a barrel, its highest price since March 15. Meanwhile, copper prices traded above $4.53 a pound and are now nearing their record high of $4.54 from February 2011.

Bond yields are holding support at their 50-day moving average. The 10-year yield traded as low as 1.57% early Tuesday. Yields have backed off from recent highs of nearly 1.76% in late March, the highest level since January 2020.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 33976.59 -136.64 -0.40
S&P 500 (0S&P5) 4144.55 -48.11 -1.15
Nasdaq (0NDQC ) 13543.02 -352.10 -2.53
Russell 2000 (IWM) 222.45 -3.54 -1.57
IBD 50 (FFTY) 45.71 -1.20 -2.56
Last Update: 12:32 PM ET 5/4/2021

Despite a strong earnings season, the market is cooling off as the Dow Jones and S&P 500 retreat from recent all-time highs. Meanwhile, the Nasdaq fell below a key area of support at the 21-day exponential moving average.

While the stock market status remains in a “confirmed uptrend,” Monday’s Big Picture column commented: “The price action in the major stock indexes might look fine, but the action beneath the surface has resulted in a challenging environment for growth investors. If you haven’t been in sync with the market, and your portfolio is having a hard time making headway, it doesn’t make sense to be 100% invested. Cut your laggards loose and hold on to your best performers. It’s OK to hold some cash at this point.”

Earnings Spotlight On Lyft, Virgin Galactic

As for major earnings reports, investors are awaiting earnings from Lyft (LYFT) and Virgin Galactic (SPCE), which are due after the close Tuesday. Shares of Lyft fell over 6% as the stock continue to fall below the 50-day line. Virgin Galactic was off nearly 2%.

Elsewhere, digital education leader Chegg (CHGG) traded 0.5% lower after missing analysts’ first-quarter earnings target and guiding second-quarter revenue below Wall Street forecasts. Chegg shares dropped 8.1% on Monday and broke below support at the stock’s 200-day moving average.

Finally, logistics leader Expeditors International (EXPD) held a solid gain of over 2% after reporting a solid Q1 win. Shares are trading just above a three-weeks-tight buy point at 112.81. The firm remains a top stock to watch among the transportation and logistics industry group, which has benefited sharply from recent positive economic data in manufacturing.

Dow Jones Today

As for the Dow Jones industrials, a handful of blue chips held losses of more than 1%. Several tech and financial stocks held losses of over 3%; Apple (AAPL) and Salesforce.com (CRM) led the downside. Meanwhile, Goldman Sachs (GS) and Microsoft (MSFT) fell more than 1.5% each.

Goldman Sachs is building a new flat base with a 356.95 buy point, according to IBD MarketSmith chart analysis. Shares are 3% away from the entry. The stock maintains a strong 85 RS Rating and a near-perfect 98 Composite Rating.

Meanwhile, shares of Microsoft traded near the bottom edge of a 5% buy zone after falling more than 2%. The stock remains in buy range from a flat-base buy point of 246.23. Microsoft stock has faded despite beating analyst’s expectations last week on the top and bottom lines.

A small handful of stocks beat the trend and held advances, including Verizon Communications (VZ) and UnitedHealth (UNH) with gains of less than 1% a piece.

Follow Fox on Twitter at @foxonstocks for more Dow Jones and market commentary.

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